Spencer, R.B. v Hugall & Hoile Ltd

[1991] FCA 16

Re: ROGER BOYD SPENCER
And: HUGALL and HOILE LIMITED and STERILINE IRRIGATION PTY LTD
No. WA G24 of 1988
FED No. 16
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Practice and Procedure - specific discovery - order sought against cross-respondent - no issue between applicant and cross-respondent - power of court - discretion - width of classes of documents sought - extended to the irrelevant - motion dismissed.

Trade Practices Act 1974, s.52

Federal Court Rules, O.15 r.8

HEARING

PERTH

#DATE 22:1:1991

Counsel for the Applicant: Mr P.G. Donovan

Solicitors for the Applicant: Mazza McCallum and Robinson

Counsel for the Respondent: Mr M.A. Snell

Solicitors for the Respondent: Blake Dawson Waldron

Counsel for the Cross-Respondent: Mr S.K. Shepherd

Solicitors for the Cross-Respondent: Robinson Cox

ORDER

The Respondent have leave to amend its defence and cross- claim and the filing and service of the "minute of proposed reamended defence and counterclaim" redesignated "minute of proposed reamended defence and cross-claim" stand as filing and service of the amended pleading.

Any party seeking leave to interrogate is to file and serve draft interrogatories on or before 12 February 1991.

The directions hearing be relisted for 19 February 1991 at 9.00am at which time the question of leave to interrogate will be considered.

The motion is otherwise dismissed.

No order as to costs as between the applicant and the respondent. The applicant is to pay the cross-respondent's costs of the motion.

NOTE: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

Roger Boyd Spencer sues Hugall and Hoile Pty Ltd for misleading or deceptive conduct in contravention of the Trade Practices Act 1974 and for negligent misstatement. The action arises out of representations allegedly made in early 1985 which, it is said, induced Spencer to purchase a defective lateral movement sprinkler irrigation system.

1. According to Spencer's reamended statement of claim he met with one Bonifant, a representative of Hugall and Hoile on three occasions in 1985, the first in January, the second on 22 February and the third on 11 March. At the first meeting, he told Bonifant that he was about to purchase a farm at Henderson Road, Serpentine, Western Australia and intended to grow lucerne and other crops on it. He regarded irrigation as essential for the successful cropping of the lucerne and says he asked Bonifant to recommend to him an irrigation system:
   

(a) which was suitable for the purpose of cultivating a lucerne crop over an area of 150 acres with a maximum width of 400 metres on the property;

(b) which was capable of providing sufficient water to replace the water which would be lost owing to evaporation even on the hottest summer days;

(c) which was capable of producing 100 cubic metres of water per hectare per day.

Bonifant is said to have orally represented that Hugall and Hoile could supply a lateral movement irrigator system which he recommended as suitable to meet all Spencer's requirements. Other representations as to its capacity and suitability for his purposes were said to have been made at the time.

1. At their second meeting on 22 February he alleges that Bonifant produced a letter on Hugall and Hoile letterhead containing technical specifications for an irrigator including a stipulated water irrigation rate of .63mm per hour. Further representations are then said to have been made that:-
   

1. The technical specifications had been recommended by the South Australian manufacturer of the irrigator as suitable for Spencer's stipulated purposes;

2. The irrigator would be delivered within four weeks of Spencer signing an order form and commissioned within a further period of two weeks.

1. At their third meeting on 11 March 1985 Bonifant allegedly produced an order form on Hugall and Hoile's letterhead for the purchase of an irrigator for $88,694 and orally represented that it could be delivered within four weeks and commissioned within a further two. Spencer says he agreed to purchase the irrigator and signed the order form. Delivery was promised for 12 April and commissioning on 26 April. On a guarantee that these dates would be adhered to Spencer says he paid $40,000 deposit on 18 March. In the event he says the irrigator was delivered on 22 April but never commissioned. On 23 May, he entered a lease agreement with Esanda under which it paid Hugall and Hoile $40,000 and paid him $48,694.

2. Various allegations are made that the irrigator failed to perform as represented and was wholly unsuitable for Spencer's requirements. "Persistent and serious faults" are said to have occurred on occasions and these are particularised. As a result of these faults Spencer says he lost two lucerne crops and other crops, and as a consequence of those crop losses claims to have sustained serious cash flow difficulties which ended in the forced sale of the farming property in 1985 along with the irrigator and other chattels.

3. So far as the pleaded representation constituted statements of advice, information or opinion he alleges that they embodied implied representations that Bonifant on behalf of Hugall and Hoile:-
   

1. had reason to believe that each of the statements was accurate;

2. had made enquiries to establish that the statements were reliable and well informed;

3. knew of facts which justified the making of the statements;

4. was making the statement in circumstances in which he was exercising all due care, skill and diligence.

1. The representations are said to have been false on various bases:-
   

1. by reference to the various faults earlier particularised;

2. because Hugall and Hoile was never able to supply an irrigator to Spencer capable of performing each of the functions promised by Bonifant so as to meet Spencer's stipulated requirements;

3. that Hugall and Hoile never had at its disposal the expertise to properly commission the irrigator;

4. that Bonifant did not believe or have reason to believe that each of the statements he had made was accurate, that he failed to make any or adequate enquiries to establish that the statements were reliable, and that he knew of no or no sufficient facts to justify the making of the statements.

5. Bonifant failed to exercise all reasonable care and diligence, well knowing that Spencer was relying on the truth of the statements.

The preceding is a summary of 11 bases upon which the various representations are said to have been false. The making of the various representations is said to have constituted conduct in trade or commerce which was misleading or deceptive or likely to mislead or deceive in contravention of s.52 of the Trade Practices Act. Alternatively they are said to have constituted negligent misstatements.

1. Hugall and Hoile is defending the claim and contests many of the material allegations. It also cross-claims against Spencer for the sum of $8694.00 being the unpaid balance of the purchase price. A further cross-claim is brought against Steriline Irrigation Pty Ltd, which is said to have contracted to supply Hugall and Hoile with the irrigation system in question. The cross-claim contends that in breach of various conditions and warranties of the contract the irrigator was not reasonably fit for the stipulated purpose of irrigating an area of 39.9 hectares with an application of .63mm per hour. The various faults set out in Spencer's claim are pleaded and indemnity or contribution is sought.

2. It is not necessary for present purposes to traverse the less than satisfactory progress of this action, save to say that it appears that it should be listed for trial in the near future. For the present I am concerned with a motion brought by Spencer seeking specific discovery orders against both Hugall and Hoile and Steriline. Discovery is sought of 6 classes of documents:-
   

(1) All correspondence passing between the Cross-Respondent and the Respondent regarding defects ascertained from 1980 to date in Steriline Lateral Move Irrigators of the same type, capacity or model as the Steriline Lateral Move Irrigator the subject of this action or regarding complaints of defects in such irrigators by purchasers of such irrigators from 1980 to date.

(2) All pamphlets, promotional documentation and specifications in the possession of the Cross-Respondent relating to Steriline Lateral Move Irrigators, including the irrigator the subject of this action.

(3) All correspondence received from purchasers of Steriline Lateral Move Irrigators from 1980 to date in which notice is given or claims are made of defects in such irrigators.

(4) All internal memoranda of the Respondent concerning complaints received from purchasers of Steriline Lateral Move Irrigators in relation to defects therein from 1980 to date.

(5) All documents recording or evidencing repair and/or maintenance work carried out by servants or agents of the Cross-Respondent since 1980 on Steriline Lateral Move Irrigators of the same type, capacity or model as the Steriline Lateral Move Irrigator the subject of this action.

(6) All documents recording or evidencing the supply and fitting of new parts since 1980 to Steriline Lateral Move Irrigators of the same type, capacity or model as the Steriline Lateral Move Irrigator the subject of this action.

1. On the hearing of the motion, Hugall and Hoile's counsel took the approach that it was easier and simpler to file an affidavit than to argue about the matter, and consented to the order sought. Counsel for Steriline, however, objected to the order on the basis that the classes of documents sought extend to irrelevant matters, and that the applicant has not shown any basis for the claim that they exist. Prior to giving my decision on the motion I was advised that Hugall and Hoile wished to withdraw its consent. I gave it leave to do so after hearing from counsel for the applicant.

2. Order 15 Rule 8 of the Federal Court Rules provides:-
   

"8. Where, at any stage of the proceeding, it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceeding that there are grounds for a belief that some document or class of document relating to any matter in question in the proceeding may be or may have been in the possession, custody or power of a party, the Court may order that party -

(a) to file any affidavit stating whether that document or any document of that class is or has been in his possession, custody or power and, if it has been but is not then in his possession, custody or power, when he parted with it and what has become of it; and

(b) to serve the affidavit on any other party."

1. I accept that this may authorise an order against a cross-respondent in favour of an applicant in proceedings although no issue may have been joined between them. But this is a matter of discretion. In his affidavit in support of the motion Spencer's solicitor says that he believes that Hugall and Hoile and Steriline were involved in supplying purchasers other than Spencer and that they received complaints relating to the capacities, performance and suitability of the systems. Reference was made to a letter from Hugall and Hoile to Steriline of 18 July 1985 in relation to complaints from Spencer and a Mr D Sands. The existence of complaints about the system is said to have a bearing on the capacity of Hugall and Hoile to make the representations referred to in the reamended Statement of Claim.

2. In my opinion, however, the logical connection necessary to show relevance is not established. It is not an appropriate use of the discovery procedure to require disclosure and production of the correspondence and records of all complaints relating to the operation of the system since 1980 whether or not they might have any bearing upon the defects of which Spencer complains. The affidavit in support of the motion borders on the speculative in this regard. A fortiori, records relating to repairs and maintenance work and the fitting of new parts since 1980 should not be required to be the subject of search and discovery. The classes described do not answer the fundamental requirements of relevance. So far as it relates to specific discovery the motion will be dismissed.

3. The outstanding order relating to the provision of further and better particulars of paragraphs 22, 26 and 33 of the amended defence and cross-claim which is the subject of paragraph 2 of the motion was to be satisfied by the filing of a reamended defence and cross-claim incorporating the relevant particulars, and counsel for Hugall and Hoile has handed up a reamended pleading today. I will make an order giving him leave to amend accordingly. As to the other matter addressed by the motion, relating to leave to interrogate, that can be dealt with after I have heard further from the parties. I now make the following orders:
   

1. The Respondent have leave to amend its defence and cross- claim and the filing and service of the "minute of proposed reamended defence and counterclaim" redesignated "minute of proposed reamended defence and cross-claim" stand as filing and service of the amended pleading.

2. Any party seeking leave to interrogate is to file and serve draft interrogatories on or before 12 February 1991.

3. The directions hearing be relisted for 19 February 1991 at 9.00am at which time the question of leave to interrogate will be considered.

4. The motion is otherwise dismissed.

5. No order as to costs as between the applicant and the respondent. The applicant is to pay the cross- respondent's costs of the motion.